Post Utme Aaua 2020 Economics Question 26

Practice objective / multiple choice question 26 from the 2020 Post Utme Aaua Economics examination.

Post Utme Aaua 2020 Economics Objective / Multiple Choice
Question 26 POST_UTME_AAUA • 2020 • ECONOMICS • objective

A government imposes a tax on a commodity to reduce its consumption. However, the tax revenue is used to fund a program that increases the production of the same commodity. What is the effect of this policy on the market equilibrium?

Answer Options

A. The tax revenue will increase the supply of the commodity, shifting the supply curve to the right.
B. The tax revenue will decrease the demand for the commodity, shifting the demand curve to the left.
C. The tax revenue will increase the price of the commodity, shifting the supply curve to the left.
Correct Answer D. The tax revenue will decrease the price of the commodity, shifting the supply curve to the right.
Correct Answer
D
Correct Option:
The tax revenue will decrease the price of the commodity, shifting the supply curve to the right.

About This Question

This is Post Utme Aaua 2020 Economics Question 26. It is one of the objective questions from the 2020 Post Utme Aaua Economics examination.

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